Waitsfield bakers lose on 'Shark Tank' but find plenty of investors right here in Vermont

Apr. 25, 2013

Partners in life and business, Liz and Dan Holtz, raise capital for their gluten free cookie company, Liz Lovely, locally after competing unsuccessfully for cash on popular Los Angeles television show Shark Tank. Photo taken at Liz Lovely headquarters in Waitsfield on April 16. / LYNN MONTY/Free Press

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Free Press Staff Writer

Partners in life and business, Liz and Dan Holtz, raise capital for their gluten free cookie company, Liz Lovely, locally after competing unsuccessfully for cash on popular Los Angeles television show Shark Tank. Photo taken at Liz Lovely headquarters in Waitsfield on April 16. / LYNN MONTY/Free Press

Swimming with the Sharks

Five things they took away from their “Shark Tank” television experience: • Think bigger when strategy planning • Stick to your guns • Give up as little as possible • Look for investors and partners who understand your mission • Go for it, every failure brings success

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WAITSFIELD — As Liz Holtz toyed with a Mexican cookie recipe in her brand-new, hot pink test kitchen, her husband, Dan Holtz, walked in and flipped on the strip of overhead lights at Liz Lovely headquarters in Waitsfield.

“Oh yeah, I forgot we have those now,” Liz said as she laughed, and looked up. She went back to intently measure baking ingredients.

Sixteen varieties of gluten-free, vegan, non-GMO Liz Lovely cookies are handcrafted in Waitsfield and distributed to more than 2,000 grocery retailers nationwide. That’s up from 500 independent grocery stores a few years ago. Their success is attributed to attending myriad trade shows and scoring a Shaws’ contract, which prompted contracts with other chains, Liz said.

Dan and Liz Holtz are partners in life and business. Their company garnered national attention when they appeared on the television show “Shark Tank” in September. Their mission was to gain $200,000 in capital. What they left with was much more — better insight for where they wanted to take their business, which was back home to the Green Mountains, and the realization that the capital they needed was right in their own backyard.

“Shark Tank” is a reality TV program that features business pitches from entrepreneurs to a group of millionaire investors, aka sharks.

“We left empty-handed,” Dan said. “But a series of things fell into place after that.”

Liz said she was happy to have had the opportunity to appear on “Shark Tank,” but was also happy she didn’t win.

“Getting thrown into that craziness was a really clarifying experience for us,” she said. “Ultimately, we found out that Vermont was going to take care of us, and that we were going to take care of Vermont by creating more jobs.”

Reinvigorated

Liz Lovely employs 20 — twice that of six months ago, Dan said. “Losing on ‘Shark Tank’ forced us to do some soul searching and to double down,” he said.

“We realized it was time to reinvest,” Liz said. “There are milestones in your business where you have to recommit. It’s like a relationship, like a marriage. You have to get reinvigorated so everyone around you sees your passion, and that really did it for us.”

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Gross sales for Liz Lovely was $1.06 million last year. This year, $1.6 million to $2 million is projected.

Liz Lovely needed the $200,000 not only for expansion and a new freezer, but for working capital to hire employees, and for fresh marketing. “That is usually tough money to borrow,” Dan said.

The “Shark Tank” experience spurred 20 or so investors to call Liz Lovely, and Liz and Dan did go down the road with a few of them, but ultimately chose to keep full control of their company.

“We were just never going to get a good deal,” Dan said. “We would be giving up a lot more of the company than we wanted.”

Not too long after returning home from L.A., the two found a way to grow their business the way they wanted, without giving up control.

Flex factor

Fortuitously, Vermont Sustainable Jobs Fund Flexible Capital Fund, also known as The Flex Fund, took on Liz Lovely. The investment was combined with business assistance to ensure they had the support they need to stay and grow in Vermont.

Janice St. Onge, president of The Flex Fund, said they chose the company because of a strong consumer following, passionate entrepreneurial owners and a track record in growing good-paying jobs.

“By investing in Liz Lovely, we hope that our capital will help them grow and stay in Vermont, add quality, livable wage jobs, and help support other growing value-added food manufacturers through their purchases of local ingredients and raw materials for their cookies,” St. Onge said.

Since The Flex Fund was launched in January 2011, five loans totaling $918,000 have been given to four Vermont companies that include: VSC Holdings, Inc. aka Vermont Smoke & Cure; Aegis Wind, LLC; Farmers to You, LLC; and Liz Lovely, Inc.

Over the course of The Flex Fund’s 10-year life, it will lend to 21 to 23 growing agricultural, forestry and renewable energy companies in Vermont. Typical loan size ranges from $100,000 to $300,000.

The deluge of out-of-state investors were a poor fit, Dan Holtz said.

“They were solely seeking an unreasonably high financial return, and they were not interested in sustainability, in Vermont, or in creating jobs in the Mad River Valley. But The Flex Fund was on our wavelength in terms of mission,” he said.

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St. Onge said sometimes what a company or entrepreneur needs, as much as capital, is business assistance, mentorship, advisory capacity, strategic advice.

“We believe that it’s not just the about the money — it’s what comes with the money that counts. So we provide access to our technical and business assistance programs, like the Peer to Peer Collaborative, and the Vermont Ag Development Program, as well as other service providers like the Vermont Small Business Development Center and the Farm Viability Program.”

The Flex Fund has raised $2.685 million in capital/equity to date out of a $4 million goal from 24 investors from Vermont and around the country, including foundations, nonprofits and high net worth individuals.

St. Onge said The Flex Fund offers continued support and mentorship. “Liz Lovely is helping to advance the Flex Fund’s food system goal of conserving and protecting agriculturally productive land in Vermont and the region.”

Liz Lovely’s gluten-free cookies are now found in all Safeway and Shaws supermarkets.

“It all came together just in time,” Dan said. “We were on a really tight timeline with the Safeway launch. That cost us every single penny that they put in. Fulfilling an order that size is so cash intensive. The money was in the bank the moment we needed to have it.”